In a move that is poised to shift the paradigm in favor of mutual fund investments, Sebi has allowed mutual funds trading in India through the stock exchanges. The platform is poised to catapult the distribution network of mutual funds significantly.

Mutual fund trading has now become easy through stock exchanges thanks to Sebi's go-ahead to kick-start online mutual fund trading platform in India. This has indeed come as a blessing in disguise for the Indian mutual fund industry at a time when the industry is desperately seeking a way out of what some consider a crisis, caused after the scrapping of the entry load fee. As Sebi banned entry load charges on MF units in 2009, cash-strapped distributors almost stopped selling equity schemes of MF houses. As a result, the industry, which was already suffering from the consequences of global financial crisis, witnessed a drastic drop in revenues. Therefore, the platform offered by premium bourses such as NSE and BSE was seen as a yet another alternative to investors to buy or sell MF units.

The move has been widely welcomed by the mutual funds industry and brokerage houses as they expect a boost in their business. This new way of mutual fund trading and transactions will benefit stock exchange brokers to improve their network by joint trading of mutual funds and stocks. While brokers are looking at this as an opportunity to tap their large network, distributors, who are already seeing declining income levels owing to the ban of entry loads, see this as a further hit to their business.

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